Successful small businesses are frequently the targets of civil lawsuits. Claims could come from just about anyone who works with or for your business.
A former worker could try to come after your company because they are upset that you fired them. A customer could claim that your products somehow injured them and try to hold you accountable for hospital bills and months of lost wages. One of your employees could accuse another of sexual harassment, and your business could end up having financial losses because of that.
How can you protect your small business from lawsuits that could eat up its assets and possibly force it into insolvency?
Invest in the right insurance
Sometimes accidents happen, and sometimes scammers come after a business with a well-fabricated tale. You have no way of knowing what could potentially happen in the future, so it’s best to ensure your business against any possibilities.
General liability policies are a good investment for most businesses, as are more specialized forms of insurance. Premises liability policies protect those with a shop or restaurant, while defective product coverage can help those who sell goods to the public. Having enough coverage will mean that neither your revenue nor your assets will be at risk if someone sues the business.
Put everything in writing
Especially when you are a new business, it can be a dangerous temptation to try to reach informal agreements with suppliers, clients or employees. It is so easy for someone to misremember something said in negotiations.
You can protect your company from frivolous lawsuits and non-performance by other parties through the creation of thorough contracts for everyone from your employees to your vendors.
Ensure that you comply with employment laws
Understanding rules that govern fair pay, unpaid leave from work and overtime wages are crucial for all employers. You also will likely need to understand the Americans with Disabilities Act and the Family and Medical Leave Act after your company reaches a certain size. Educating yourself so that you can appropriately respond to employee requests or complaints will reduce the risk of your company facing a damaging lawsuit.